European steel industry welcomes Parliament decision to reject interference in the carbon market

EUROFER: ETS-market the only functioning part of European climate policies

The European Parliament today has rejected the European Commission’s backloading proposal and directed it back to the Parliament’s Environment Committee for further discussion. The European Steel Association welcomes the decision and points out that an adoption would have been a further blow to the credibility of the EU Emissions Trading Scheme (ETS). “It is clear now that the Commission should not intervene in a functioning market. The market mechanism of the ETS is the only part of European climate policies that actually works,” EUROFER Director General Gordon Moffat states. “The fundamental flaw of the system is that high carbon prices result in the deindustrialization of Europe in the long term. There are no technologies allowing industry to meet the target of 80 to 95 per cent in the Commission Roadmap for 2050.”

The European Commission had proposed to amend the ETS in a way that would have given it the right to withhold allowances. This would be a precondition for the Commission’s actual backloading plan, the aim of which is to withdraw 900 million emissions allowances and in a second step cancel them, thus artificially raising the price for allowances. EUROFER has always been critical of the backloading proposal, pointing out that it would add to the cost burden and weaken international competitiveness of the European steel industry.

EUROFER has also pointed out in the past that the ETS is functioning as intended. It was invented as a market based system to reduce carbon emissions. As such, it is only natural that the price for carbon allowances reflects the current economic crisis with decreasing production over a broad spectrum of energy-intensive and manufacturing industries. The fact that Europe will indeed meet its 2020 reduction targets of 21 per cent compared to 2005 levels is further proof that the ETS-market is functioning as intended. A higher carbon price simply makes this effort more expensive and more difficult.

Represented by EUROFER, the European steel industry is a world leader in its sector with a turnover of EUR 170 billion and direct employment of 360 thousand highly skilled people, producing on average 190 million tonnes of steel per year. More than 500 steel production and processing sites in 23 EU member states provide direct and indirect employment and a living for millions of European citizens.